China Funding Trial to Help Out Small Banks

Move Is Aimed at Protecting Smaller Banks from Volatile Money Markets

Jan. 21, 2014 1:09 a.m. ET

SHANGHAI—China's central bank has launched a trial program aimed at keeping short-term borrowing costs low and helping to protect the nation's smaller banks that are heavily reliant on funding from volatile money markets.

The move comes after interest rates that banks have to pay to borrow cash from each other jumped in recent days, threatening to cause pain in the financial system and start another funding squeeze after three...